Bitcoin’s sideways move doesn’t falter institutional investors
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Bitcoin’s (BTC) price has decrease by 11 per cent since its early May peak of $15,500. However, this hasn’t dissuaded institutional investors from trading digital assets.
Boston firm Fidelity Investments surveyed institutional investors to measure their activity in digital assets. Thirty six per cent said they owned digital assets or their derivatives, across the US and Europe. This is a 22 per cent increase from last year.
Of those who own digital assets, one quarter held BTC. Eleven per cent of respondents held ether (ETH), the native token to the Ethereum network.
Evidence of this market participation is apparent on the Chicago Mercantile Exchange (CME).
Since BTC‘s yearly high on May 7, open interest on CME’s BTC Options Market has increased over 900 per cent. Open interest currently sits at $US371m ($540.4m), up from $US37m in early May.
It’s clear to see the funds are entering BTC derivative markets. However, the question remains, why hasn’t BTC’s price increased?
A recent article from crypto news site CoinDesk provides some insight. The article reports the number of investors holding 1,000 BTC or more has increased 2 per cent since early May.
The data from analytics firm Glassnode, suggests that investors are accumulating BTC. Acquiring the asset over time ensuring that it does not raise prices.
BTC’s price followed a sideways trajectory this week, decreasing 1.26 per cent.
This time last week, BTC reached a peak of $13,910. Market value hasn’t gone beyond this price since.
Volatility struck BTC’s price on June 15, causing market value to fall 4.16 per cent over six hours. However, it recovered the same day to $13,591. BTC currently sits at $13,654.
ETH closely mirrored BTC’s price, moving down 3 per cent. As we draw closer to the launch of Ethereum 2.0, it’s unclear how ETH’s price will change.
Ethereum is redeveloping its network consensus protocol, with the first phase due to go live in Q3 2020.
This will move the platform away from Proof of Work, as favoured by Bitcoin to Proof of Stake, which is less resource-intensive.